Exhibit 99.2

 

INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION

 

Set forth below are unaudited pro forma statements of consolidated operations of VIA NET.WORKS, Inc. and its subsidiaries for the year ended December 31, 2003 and the six month period ended June 30, 2004 reflecting the sale of VIA NET.WORKS UK Ltd as if the transaction had occurred at January 1, 2003, and a pro forma consolidated balance sheet of VIA NET.WORKS, Inc. and its subsidiaries as of June 30, 2004 reflecting the transaction as if it occurred on that date.

 

The pro forma financial information presented is not necessarily indicative of the results of operations for the six month period ended June 30, 2004 that might have occurred had the sale of VIA NET.WORKS UK Ltd actually taken place on January 1, 2003 or as of June 30, 2004, or of the future results of operations of VIA NET.WORKS, Inc. The pro forma financial information are based upon the historical consolidated financial statements of VIA NET.WORKS, Inc. included in its Annual Report on Form 10-K for the year ended December 31, 2003 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, both filed with the Commission, and should be read in conjunction with such historical financial statements and the notes thereto. The amounts disclosed for VIA UK Group have been extracted from unaudited management accounts.

 

 

VIA NET.WORKS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)

 

As of June 30, 2004

(In thousands of U.S. dollars, except share data)

 

		VIA as reported			VIA UK Group		Pro Forma Adjustments		Pro Forma Consolidated
ASSETS
Current assets:
Cash and cash equivalents		$	42,291		1,400		9,514	(A)	$	50,405
Restricted cash		1,409			—				1,409
Trade and other accounts receivable		13,868			5,753				8,115
Other current assets		6,157			1,644				4,513
Deferred tax assets		1,637			—				1,637
Total current assets		65,362			8,797		9,514		66,079
Property and equipment, net		12,455			1,446				11,009
Goodwill		14,154			2,043				12,111
Intangible assets, net		4,420			—				4,420
Other non-current assets		1,224			—				1,224
Deferred tax asset		7,928			—				7,928
Total assets		$	105,543		12,286		9,514		$	102,771
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	11,997		2,615				$	9,382
VAT and other taxes payable		1,952			618				1,334
Current portion of capital lease obligations and long-term payables		426			—				426
Deferred revenue		18,636			6,214				12,422
Accrued expenses		8,950			1,404				7,546
Deferred tax liability		7,928			—				7,928
Other current liabilities		3,083			172				2,911
Total current liabilities		52,972			11,023				41,949
Capital lease obligations and long-term payables, less current portion		228			—				228
Deferred tax liability		1,142			—				1,142
Total liabilities		54,342			11,023				43,319
Stockholders’ equity:
Common stock		63			246		246		63
Additional paid-in capital		557,909			2,423		2,423		557,909
Treasury stock		(1,521		)	—		—		(1,521		)
Accumulated deficit		(473,448		)	4,001		6,845		(470,604		)
Accumulated other comprehensive loss		(31,802		)	(5,407	)	—		(26,395		)
Total stockholders’ equity		51,201			1,263		9,514	(B)	59,452
Total liabilities and stockholders’ equity		$	105,543		12,286		9,514		$	102,771

 

 

VIA NET.WORKS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

For the six month period ended June 30, 2004

(In thousands of U.S. dollars, except share data)

 

		VIA as reported			VIA UK Group		Pro Forma Adjustments		Pro Forma Consolidated
Revenue		$	36,474		10,707		(500	)(C)	25,267
Operating costs and expenses:
Internet services		17,589			4,393				13,196
Selling, general and administrative		34,589			5,860				28,729
Impairment and restructuring charges		783			—				783
Depreciation and amortization		4,718			773				3,945
Total operating costs and expenses		57,679			11,026				46,653
Operating loss from continuing operations		(21,205		)	(319	)	(500	)	(21,386		)
Interest income (expense), net		273			1				272
Other income (expense), net		3,576			3,804		180	(D)	(48		)
Foreign currency gains (losses), net		(3,881		)	7				(3,888		)
Gain (Loss) from continuing operations income taxes		(21,237		)	3,493		(320	)	(25,050		)
Income tax benefit (expense)		(57		)	—				(57		)
Net gain (loss) from continuing operations		$	(21,294	)	3,493		(320	)	$	(25,107	)
Net loss from continuing operations per share – basic and diluted		$	(0.35	)					$	(0.41	)
Share used in computing basic and diluted loss per share		60,860,462							60,860,462

 

For the year ended December 31, 2003

(In thousands of U.S. dollars, except share data)

 

		VIA as reported			VIA UK Group		Pro Forma Adjustments		Pro Forma Consolidated
Revenue		$	68,668		24,785		(1,410	)(E)	42,473
Operating costs and expenses:
Internet services		31,414			7,949		(700	)(F)	22,765
Selling, general and administrative		58,304			16,217				42,087
Impairment and restructuring charges		11,724			—				11,724
Depreciation and amortization		8,107			3,680				4,427
Total operating costs and expenses		109,549			27,846		(700	)	81,003
Operating loss from continuing operations		(40,881		)	(3,061	)	(710	)	(38,530		)
Interest income (expense), net		1,088			2				1,086
Other income (expense), net		(574		)	(253	)	315	(G)	(6		)
Foreign currency gains (losses), net		16,293			(6	)			16,299
Loss from continuing operations income taxes		(24,074		)	(3,318	)	(395	)	(21,151		)
Income tax benefit (expense)		(165		)					(165		)
Net loss from continuing operations		$	(24,239	)	(3,318	)	(395	)	$	(21,316	)
Net loss from continuing operations per share – basic and diluted		$	(0.39	)					$	(0.35	)
Share used in computing basic and diluted loss per share		61,135,959							61,135,959

 

 

NOTES TO PRO FORMA FINANCIAL INFORMATION

 

Notes to the Pro Forma consolidated Balance Sheet and Pro Forma Consolidated Statements of Operations:

 

Estimated gain on disposal:

 

The consideration for the shares amounts to $9,514K in cash received at closing and $3,619K in cash to be received within one year. Since the cash to be received within one year is contingent on certain contractual conditions, we did not consider this amount in the calculation of the gain on the disposal. The result of the contingent consideration will be recognized after the contingencies have been resolved.

 

The gain on the disposal, amounting to $2,844K has been calculated by deducting the net asset value and the currency translation adjustment (CTA) relating to the VIA UK Group at June 30, 2004 from the cash consideration already received.

 

Consideration already received:		$	9,514K
Elimination net asset value of VIA UK Group		$	(1,263K	)
Deduction of CTA		$	(5,407K	)
Estimated gain on disposal		$	2,844K

 

The estimated gain on the disposal is subject to the final FIN 45 analysis on valuing the guarantees on the transaction.

 

The costs of divestment are not included in the calculation of the estimated gain on disposal.

 

Explanatory notes:

 

(A) The consideration for the shares amounts to $9,514K in cash received at closing.

 

(B) Pro forma adjustments include the elimination of the UK equity plus the income statement effect of additional inter-company adjustments.

 

Stockholders’ equity Pro Forma Consolidated:		$	59,452K
Stockholders’ equity before adjustments		$	51,201K
Difference:		$	8,251K
Explanation of difference:
Estimated gain on disposal		$	2,844K
Adjustment of CTA VIA UK Group		$	5,407K
Total explained		$	8,251K

 

(C) VIA NET.WORKS, Inc recognized intercompany revenues amounting to $500K relating to transactions with the UK operations which, on a pro forma basis, should not be considered in the Statement of Operations for the 6 month period ended June 30, 2004.

 

(D) VIA NET.WORKS, Inc incurred intercompany expenses amounting to $180K relating to transactions with the UK operations which, on a pro forma basis, should not be considered in the Statement of Operations for the 6 month period ended June 30, 2004. Please also refer to explanation (A) regarding the result of the transaction.

 

(E) VIA NET.WORKS, Inc recognized intercompany revenues amounting to $1,410K relating to transactions with the UK operations which, on a pro forma basis, should not be considered in the Statement of Operations for the 12 month period ended December 31, 2003.

 

(F) VIA NET.WORKS, Inc incurred intercompany expenses amounting to $700K relating to transactions with the UK operations which, on a pro forma basis, should not be considered in the Statement of Operations for the 12 month period ended December 31, 2003.

 

 

(G) VIA NET.WORKS, Inc incurred intercompany expenses amounting to $315K relating to transactions with the UK operations which, on a pro forma basis, should not be considered in the Statement of Operations for the 12 month period ended December 31, 2003.